Questions re STR around Orlando, FL
Member since 2022 · 2 posts · 0 votes
Questions re STR around Orlando, FL
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votesQuote from @Arthur Chu:
Thanks @Ryan Moyer @Shawn McCormick! Was wondering - considering the macro economic trends, next year if the vacation rental rates have to be dropped dramatically and the COC doesn't make sense for an STR, do these custom-made vacation communities have any restrictions to use as an LTR as an exit plan. Thanks.
I don't think there's any rules against it, but I don't know for sure. But honestly it's not very relevant anyway. I know it's a popular thing for people 3 years out of date on market trends to say "make sure you can fall back on using it as an LTR if you need to" but, like I said, they're just parroting 3 year old info that is really no longer relevant.
It's maybe possible/relevant if you're buying in a non-vacation market where regulations are the main concern and prices are still based on what people are willing to pay for a primary residence there. But in established short term rental vacation markets like Disney or Gatlinburg the homes are priced to be STRs. They don't even come close to making sense as a LTR. Even if you can legally rent it as a LTR an 8br themed home in one of those resorts would rent for what, $3000/mo as a LTR? On an $850k mortgage (not to mention the theming/setup costs) that's not going to help. If the STR market gets so bad that we're having to fall back on $3000/mo as an LTR for a million dollar house, we're all screwed.
Cosmic Vacations4.9174 Reviews
8 Replies
- 4yRyan MoyerBusiness MemberProperty Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
Davenport/Kissimmee are pretty well separated into STR resorts and residential neighborhoods. Yes the STR resorts have HOAs, but they are HOAs designed to manage a short term rental neighborhood. They're not your traditional HOA where you have to worry about them changing their mind.
Average daily rates/income are going to be heavily dependent on what kind of place you're talking about. If you're looking at big 8br themed homes I'm happy to share the numbers from my place with you. Everything else AirDNA/Rabbu are a decent starting point, and you can also comb through calendars of listings that are similar to what you're interested in and get an idea.
Regarding saturation and CoC and Orlando, I wouldn't do Orlando without theming. Even that is starting to get a little saturated, but not there yet. As far as regular nice houses with nice furniture go yeah, that's pretty saturated. You need to stand out in this market.
Cosmic Vacations4.9174 Reviews - Property Manager · Tampa, FL · Member since 2022 · 147 posts · 66 votes4y
@Jay Breitlow would be a great resource for you!
- 4yShawn McCormickPro MemberRealtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
@Arthur Chu There are a ton of threads in here about the same as you are asking, your questions and more will be answered. As Ryan said, we have quite a few STR only communities with amenities and locations that are made for tourism and are zoned specifically for rentals. If you go outside of those, you're going to risk losing the attractiveness of why people come here. They want to be close to the theme parks and have a well themed house. Since we don't have ocean/mountain views or unique locations, the community should have great amentities (like Championsgate, Solara, Solterra, and Storey Lake to name a few) and also have themed bedrooms and a converted garage.
To address your saturation issues, yes, we do have tens of thousands of STR homes, but we also get over 70 million visitors a year. Finding the niche size will also be important, smaller ones (2-4 beds) will be competing against hotels, time shares, condotels, and townhomes and sometimes it can be a race to the bottom with ADR. So keep a clean home with amazing photos that is close to Disney and is well themed and you won't get caught in that trap.
Best of luck!
- Member since 2022 · 2 posts · 0 votes4y
Thanks @Ryan Moyer @Shawn McCormick! Was wondering - considering the macro economic trends, next year if the vacation rental rates have to be dropped dramatically and the COC doesn't make sense for an STR, do these custom-made vacation communities have any restrictions to use as an LTR as an exit plan. Thanks.
- 4yRyan MoyerBusiness MemberProperty Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
Quote from @Arthur Chu:
Thanks @Ryan Moyer @Shawn McCormick! Was wondering - considering the macro economic trends, next year if the vacation rental rates have to be dropped dramatically and the COC doesn't make sense for an STR, do these custom-made vacation communities have any restrictions to use as an LTR as an exit plan. Thanks.
I don't think there's any rules against it, but I don't know for sure. But honestly it's not very relevant anyway. I know it's a popular thing for people 3 years out of date on market trends to say "make sure you can fall back on using it as an LTR if you need to" but, like I said, they're just parroting 3 year old info that is really no longer relevant.
It's maybe possible/relevant if you're buying in a non-vacation market where regulations are the main concern and prices are still based on what people are willing to pay for a primary residence there. But in established short term rental vacation markets like Disney or Gatlinburg the homes are priced to be STRs. They don't even come close to making sense as a LTR. Even if you can legally rent it as a LTR an 8br themed home in one of those resorts would rent for what, $3000/mo as a LTR? On an $850k mortgage (not to mention the theming/setup costs) that's not going to help. If the STR market gets so bad that we're having to fall back on $3000/mo as an LTR for a million dollar house, we're all screwed.
Cosmic Vacations4.9174 Reviews - 4yShawn McCormickPro MemberRealtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
Quote from @Arthur Chu:
Thanks @Ryan Moyer @Shawn McCormick! Was wondering - considering the macro economic trends, next year if the vacation rental rates have to be dropped dramatically and the COC doesn't make sense for an STR, do these custom-made vacation communities have any restrictions to use as an LTR as an exit plan. Thanks.
I agree with Ryan. When covid first started, many of the owners of STR here either put a long term tenant in there just to cover their nut or sold them (and are now kicking themselves!!...double the value now). Yes, most all of these communities do allow for LTR, but the infrastructure is not conducive to it. Most have a CDD to help offset the fact that there aren't full time residents contributing to the local economy so less grocery/retail stores, schools are further away and especially with the bigger homes...you will usually have a few kids, but no neighbors to play with or socialize.
I actually have one client that has a LTR in a 9 bedroom in Solara that is allowing his tenant to arbitage his home for Airbnb. He is getting $4200 month. Like @Ryan Moyer said, at that price, it just doesn't make sense. The flip side is that at least if you have a bigger home, you can always fill it up with guests. So if you have an 8 bedroom, you can list it as a 3, 4, 5, 6, 7 or 8 bedroom and keep it full, but at a lower ADR. If you have a small unit, its a race to the bottom with the thousands of others that are just trying to stay afloat.
- Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes4y
Quote from @Ryan Moyer:
Everything else AirDNA/Rabbu are a decent starting point, and you can also comb through calendars of listings that are similar to what you're interested in and get an idea.
This is your answer. To elaborate a little:
1. Municode is your friend. Here is the link for Kissimmee. Each city will call it something different, from transient rental to vacation rental to something else.
2. A vacation rental HOA will have it in their CC&Rs that they allow it. All the owners will have purchased as investments so there's almost no way they are going to change anything, if they are even allowed.
3. The answer above is it. Do your own research. FL is seasonal, so check your exact property type you are looking at and check the rates for each month. Check competition that have been doing it awhile and adjust rates a few months in advance. I always emphasize doing the work up front so you're not sweating later. The more numbers you run the more you will know the market and now have questions about whether or not a property is worth asking.
4. Yes, the market there is pretty saturated and may continue to be. There's a lot of land out there -- land to build newer and better. You will want to be in the top 5-10%. Figure out as many ways to stand out as you can. Theming, as said above. An Instagram-able wall or 2 (with your contact info on it) so your guests advertise for you. As many unique things that your guests can enjoy as possible. Make sure each stay is a Plus Plus Plus stay! The founders asked themselves what would make it a 5 star experience, and then kept asking.
- Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes4y
@Arthur Chu all great responses above. I would emphasize the importance of having your home stand out. There's theming, and there is THEMING. We have seen our highly themed homes (we are talking bat caves with LED lighting, Aladdin rooms with "floating" magic carpet beds, etc.) book for literally twice the nightly rate of a home that simply has cute themed wallpaper and pillows. You'll find a wide range of decorators in Orlando, some are extremely creative and on top of the trends while others produce more "cookie cutter" homes. Predictably, top decorators are more expensive and there may be a wait for their services, but this will pay off in my opinion.
Regarding calculating rates and occupancy for a specific home, we use Key Data Dashboard, a third-party software that pulls directly from booking data. It's far more reliable than AirDNA. Happy to help with the numbers!
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